Builders struggle with massive drywall tariff imposed by Ottawa

Drywall prices across Western Canada have shot through the roof after the federal government imposed preliminary anti-dumping tariffs of up to 276 per cent on gypsum board products imported from the United States.

“It’s such a big increase the cost has to go to the consumer,” said Andrew Davidson, owner of dL Insulation Inc. in Saskatoon.

“It’s way past anybody’s profit margins, we just can’t operate at the same costs.”

Davidson just signed a contract to develop a new apartment building complex in Saskatoon, but said now he will need to go back and change pricing because of the drywall cost increase.

“My profit is all gone at the original price,” he said. “I’d actually be losing money.”

Davidson estimates a 1000 sq. foot home will now cost $800 more to drywall. “It’s frustrating,” he said.

The Canada Border Services Agency imposed preliminary tariffs last Tuesday on U.S. gypsum board imported into Canada for use in British Columbia, Alberta, Saskatchewan, Manitoba, and the Yukon and Northwest Territories.

“It’s causing instability in the housing market,” said Chris Guérette, CEO of Saskatoon and Region Home Builders’ Association.

“It’s causing the unknown. Any business owner knows when that happens the risk increases and it makes business development quite hard.”

Canada doesn’t have enough manufacturers making drywall in the country to keep up with the demand we consume, that’s one reason why U.S. product is imported.

“I think the federal government should be investing money into the manufacturing industry instead of penalizing people trying to do business,” Davidson said.

A spokesman for Canada’s largest independent gypsum supplier said Tuesday the tariffs undermines the stability of the industry and could impact the rebuilding efforts in Fort McMurray, where thousands of buildings were destroyed by fire earlier this year.

“If we can’t get enough material to ship into the province of Alberta then as Fort McMurray stands, it would be affected like everybody else,” said Doug Skrepnek, chief executive officer at WSB Titan in a telephone interview from Vaughan, Ont.

He said the surprise decision on tariffs hammered the industry.

“On Sept. 6 we went from understanding there may be a tariff to there is a tariff and that tariff will add between 50 and 60 per cent, depending upon the market, price increase to our customers,” said Skrepnek, whose company supplies one in every six sheets of drywall used in Canada.

The Canada Border Services Agency imposed preliminary tariffs last Tuesday on U.S. gypsum board imported into Canada for use in British Columbia, Alberta, Saskatchewan, Manitoba and the Yukon and Northwest Territories.

A CBSA statement issued Tuesday said Canadian producers have legislated rights to seek protection from dumped imports by way of duties.

“Following a complaint filed on April 18, 2016, by CertainTeed Gypsum Canada Inc. of Mississauga, Ont., the CBSA initiated an investigation on June 6, 2016,” said the statement. “The CBSA made a preliminary determination of dumping on September 6, 2016 and provisional duties were imposed at that time to offset the dumping.”

No one from CertainTeed Gypsum Canada was immediately available for comment.

Skrepnek said CertainTeed has gypsum production plants in Vancouver, Calgary and Winnipeg, but the operations are only able to supply between 40 and 60 per cent of the building needs in Western Canada.

The limited supply of CertainTeed gypsum in Western Canada is one reason why U.S. product is imported into Canada, he said.

The CBSA decision is under review for the next three months, but the import duty will remain until a final decision is made, Skrepnek said.

“It is my hope and my desire someone listens and realizes there are thousands of people who really can’t wait 90 days for someone to realize this is a massive issue that needs to be dealt with today,” he said.

Minister of CBSA Ralph Goodale responded to the concerns at a University of Saskatchewan funding announcement on Sept. 15, 2016.